Local judges say they can't hear MICG lawsuit

A view of the office building at 11815 Fountain Way where offices for MICG were formerly located.

A view of the office building at 11815 Fountain Way where offices for MICG were formerly located. (Adrin Snider, Daily Press)

Peter Frost, pfrost@dailypress.com | 247-4744

All five judges of the Seventh Judicial Circuit Court in Newport News have recused themselves from hearing a lawsuit filed by a Newport News investor against MICG Investment Management, its CEO and the firm that provided MICG's audits and accounting services, according to a court order filed last week.

The order, signed by Aundria D. Foster, the court's chief judge, asked the Virginia Supreme Court to designate another judge to preside over the proceedings. A court date has not been set.

Under Virginia law, judges may recuse themselves from proceedings if they are connected with involved parties, creating a conflict of interest.

Though Foster's order did not specify why each of the judges disqualified themselves from hearing the case, the plaintiff, Shirley A. Hatten, is the ex-wife of longtime Newport News attorney Robert R. Hatten, a partner at Patten, Wornom, Hatten & Diamonstein, the largest law firm in the city.

Two calls to Foster's office were not returned Wednesday. Shirley Hatten's attorney, Phillip. L. Hatchett, could not be reached for comment.

Shirley Hatten contends in the $1.45 million lawsuit that MICG and CEO Jeffrey A. Martinovich misrepresented and omitted information about her investments in three hedge funds and in MICG stock, and failed to liquidate her investments when requested.

Hatten is the second investor to sue the troubled financial firm, which had offices in Newport News, Norfolk, Richmond, Alexandria and New York City. The other suit is scheduled for a hearing in Chesterfield County Circuit Court in July.

MICG and Martinovich are the subject of charges issued by the Financial Industry Regulatory Authority, or Finra, that accuse the firm of several securities violations, including fraud. MICG has shuttered its brokerage business and it has withdrawn its broker-dealer registration with Finra and the Securities and Exchange Commission.

Martinovich is no longer licensed with Finra as a broker. He told the Daily Press he is not affiliated with any financial institution.

In the complaint, Hatten alleges that Martinovich and MICG committed fraud, breached their contracts and fiduciary duty, wrongfully withheld property belonging to Hatten and the Shirley A. Hatten Living Trust, and were negligent.

The suit, which was filed in May, also accuses MICG's former auditor and accountant Harbinger PLC and that firm's lone partner, Michael T. Umscheid, of constructive fraud, aiding and abetting fraud and breach of fiduciary duty.

Hatten is seeking to recover the $1.1 million she invested in MICG's hedge funds and investments, and $350,000 in punitive damages along with interest and legal fees. She also is asking the court to order an accounting of the investments.

The story so far

MICG Investment Management and CEO Jeffrey A. Martinovich are the subject of charges issued by the Financial Industry Regulatory Authority, or Finra, that accuse the firm of several securities violations, including fraud. MICG has shuttered its brokerage business and it has withdrawn its broker-dealer registration with Finra and the Securities and Exchange Commission. Martinovich is no longer licensed with Finra as a broker. He told the Daily Press he is not affiliated with any financial institution.